-1.40(-0.11%)

-0.02(-0.09%)

+0.00(+0.09%)

Home Depot is having its worst month in 8 years. But here's why some traders are getting bullish

Home Depot HD shares have been on shaky ground this month, falling 9 percent. But, one technically minded trader says its foundation is still solid.

"If we see another downdraft in the broad market that takes it down to the 200-day moving average, that could be a real good entry point to either add to old positions or add new positions," Matt Maley , equity strategist at Miller Tabak, told CNBC's " Trading Nation " on Tuesday.

Home Depot's 200-day moving average is $166.78, or 8 percent lower than its current price.

"It has come down quite a bit, but look how far it had rallied," said Maley. "It was ready to pull back anyway. So just the fact that the broader market sold off so sharply because of forced selling, this stock went down quite a bit."

A broader market sell-off last week pulled Home Depot shares sharply lower and erased its year-to-date gains. The stock is now down 4 percent in 2018 after being up by as much as 6 percent at the end of January. Its shares are on track for their worst monthly performance since June 2010. Home Depot is the third-worst performer on the Dow Jones so far this month.

Questions over how fast the Federal Reserve might raise rates have worsened Home Depot's sell-off this month. Investors have grown skittish on the threat of a more aggressive Fed willing to raise rates at a faster pace this year as inflation heats up. Higher interest rates could lead to a drop in home loans and refinancing, putting pressure on the home renovation and so-called DIY, or do-it-yourself, market to which retailers like Home Depot and Lowe's LOW cater. The chances of a March rate hike are 78 percent, according to CME Group fed funds futures.

"I view Home Depot really as a direct play on the consumer and the housing market and both of them are strong," Tepper told "Trading Nation." "This housing market right now is a sellers' market. There's just a ton of inventory which really incentivizes the consumer to renovate."

Home Depot is doing some renovation of its own. Tepper says updates to its stores should lead to more traffic and an increased amount of time spent at locations. On top of that, the retailer has updated its website and app, which has contributed to a 19 percent increase in online sales year over year.

"We like the stock at this level, and we think it's a buying opportunity," said Tepper.

Home Depot shares are down nearly 1 percent on Wednesday. Its shares remain in correction territory, having fallen 12 percent from a 52-week high set Jan. 29.